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Capital Budgeting9 - Year Sales Fixed Costs Variable Costs...

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Old Exam Questions - Capital Budgeting Page 51 of 55 Pages Year 0 1 2 3 4 Sales $5,000,000.00 $8,000,000.00 $8,000,000.00 $5,000,000.00 Fixed Costs -$300,000.00 Variable Costs -$3,000,000.00 Depreciation -$1,138,500.00 EBIT Interest EBT Taxes (40%) NOPAT Depreciation $1,138,500.00 OCF NOWC Initial Investment Shipping Salvage Tax on Salvage Total GFA FCF PV NPV A. $1,679,046.34 B. $1,521,061.92 C. $1,600,054.13 D. $1,758,038.55 E. $1,442,069.71 84. You are given the following cash flow information for a project. Given this information, and assuming that the correct risk-adjusted discount rate (WACC) to use is 12 percent, determine the net present value of this project. (Hint: you may also wish to solve for IRR for use with the next problem). Year Cash Flow Present Value 0 -$10,000.00 1 $8,000.00 2 -$4,000.00 3 $9,000.00 4 $8,000.00 5 -$3,000.00 Total A. $2,643.93
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Old Exam Questions - Capital Budgeting Page 52 of 55 Pages B. $3,467.46 C. $2,918.44 D. $3,741.97 E. $3,192.95 85. You are given the following cash flow information for a project. Given this information, and assuming that the correct risk-adjusted discount rate (WACC) to use is 12 percent, and that the firm’s true reinvestment rate is also 12 percent, determine the difference between the internal rate of return (IRR) and the modified internal rate of return (MIRR) for this project. Year Cash Flow Present Value Future Value 0 -$10,000.00 1 $8,000.00 2 -$4,000.00 3 $9,000.00 4 $8,000.00 5 -$3,000.00 Total
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